ISI Group upgrades the machinery sector after it does a bit of channel checking, and while the firm cuts estimates to below consensus, it reckons that the bottom will come in H1 as inventories are reduced. Caterpillar (CAT), CNH Global (CNH), Cummins (CUM), Deere (DE), Eaton (ETN), Illinois Tool Works (ITW), Ingersoll-Rand (IR) and Oshkosh (OSK) all receive an upgrade. ISI tips Caterpillar to be among the best performers in H1 after it was a notable laggard last year.

Italy's Fiat has won over the board of its U.S. tractor and construction machinery unit CNH Global (CNH) with an improved $1.5B bid that would create the world's third-largest capital goods group by sales. The new offer, which adds a ~$300M cash dividend to a previous all-share bid, would allow Fiat to buy the 12% of CNH it doesn't already own. CNH +4.5% premarket.